Small, medium-sized enterprises buoyed by series of supportive policy initiatives

Business performance of China's small and medium-sized enterprises improved in 2023 on the back of the gradual resumption of work and production after the COVID-19 pandemic, alongside a package of supportive policy measures, the latest data showed on Wednesday.

Analysts said the improvement indicates the steady recovery of business activity among SMEs after the COVID-19 shocks, adding to signs of further momentum.

China's Small and Medium Enterprises Development Index, based on a survey of 3,000 SMEs, averaged 89.2 in 2023, up from 88.4 in 2022, said the China Association of Small and Medium Enterprises.

However, the index declined from 89.3 in November to 89 in December. For the fourth quarter, the index came in at 89.1, from 89.2 in the third quarter.

"Despite some fluctuations, the latest figures point to a continued recovery trend," said Hong Yong, a research fellow at the Chinese Academy of International Trade and Economic Cooperation's e-commerce research institute.

"This indicates that SMEs made certain progress in development last year, driven by a steady consumption rebound, growth in services consumption, recovery in fixed-asset investments and the vigorous development of high-tech industries."

Hong said the country introduced a series of policies last year aimed at promoting growth of the private sector, which has created a better development environment for SMEs and significantly boosted their confidence.

Looking ahead to 2024, he believes development prospects for SMEs will continue to improve with existing policies taking effect gradually and more supportive measures in the offing.

Citing the latest figures, Yue Xiangyu, a researcher at the Shanghai University of Finance and Economics' Institute for the Development of Chinese Economic Thought, said while the 2023 index showed an overall rebound, it remains below the 100 mark that separates an upward trend in business performance from less vitality. He said that suggests China still suffers from "scarring effects" caused by the pandemic over the past few years.

Yue's views were echoed by Zhou Maohua, a macroeconomic researcher at China Everbright Bank, who called for further steps to support the development of hard-hit SMEs, saying more efforts should be made to promote a more balanced recovery.

China has already pledged efforts to bolster its private sector, mostly SMEs, as the National Development and Reform Commission on Tuesday held a meeting with five private companies to address private enterprises' concerns and support their sustainable development.

Zheng Shanjie, head of the NDRC, said at the meeting that the commission will carefully review the opinions and suggestions of participating entrepreneurs and establish a mechanism for cross-regional and cross-departmental coordination to solve problems.

Kelvin Hou, founder and CEO of Time Traveler, a Beijing-based company offering extended reality and artificial intelligence services and content, said the government has provided robust policy support for technology and cultural enterprises, creating a favorable business environment and vast market opportunities for SMEs such as Time Traveler.

"I am highly optimistic about China's long-term economic development," Hou said. "China possesses several favorable conditions, including its ultra-large domestic market and robust industrial innovation capabilities, indicating that it remains one of the most promising markets with huge growth potential."

Looking ahead, he said businesses need to better cater to market demands, and refine their strategies to seize existing opportunities while strengthening their capabilities.

Zhan Junhao, founder of Fujian Huace Brand Positioning Consulting, also expressed optimism regarding China's prospects this year, saying SMEs will also experience steady improvement in the coming months.